Conde Nast CEO Warns Tough Times Aren't Over

Memo: 'Not Immune to Effects of Substantial Revenue Losses'

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NEW YORK (AdAge.com) -- Magazine companies' hope for a second-half recovery seems to be turning up empty, particularly if a new memo from Conde Nast CEO Charles Townsend, labeled "Important Announcement," is any guide.

Charles Townsend
Charles Townsend Credit: Hugh Stewart
In the note sent to staffers Monday afternoon, Mr. Townsend said the economy has contracted at a rate not seen in 80 years. "Our company and our brands have weathered this storm," he said. "However, we are not immune to the effects of the substantial revenue losses resulting from the deep and prolonged recession. Consequently, we must realign Conde Nast to be a successful business in an emerging economy that is now predicted to be painfully slow in recovering."

Conde Nast, the publisher of titles from Vogue to Glamour to The New Yorker, is working with McKinsey on ideas, he said.

The memo comes a day before Conde plans to release official ad page counts for its extra-important September issues -- and suggests that the numbers won't be too pretty. Publishers at Conde and elsewhere have been working and worrying over the issues, which provide more than their fair share of ad pages for any given year. Closing the September sales also means Conde and others have a pretty good idea how the year is going to shake out as a whole.

Conde staffers got a similar memo from Mr. Townsend in March. He subsequently closed Portfolio magazine, the company's very expensive attempt to build a new business magazine from scratch.

"We've just hired McKinsey," a Conde spokeswoman said when asked to elaborate on the new memo Monday. "They're just beginning to work with Chuck and his team. We'll by guided by McKinsey's recommendation and we'll take it from there. The work is just beginning."

Read CEO Charles Townsend's full July 20 memo:

From: Chuck Townsend
Subject: Important Announcement

The U.S. economy has contracted at a rate not seen in 80 years, forcing companies across America to adjust to the reality of this major economic setback. Our company and our brands have weathered this storm. However, we are not immune to the effects of the substantial revenue losses resulting from the deep and prolonged recession. Consequently, we must realign Condé Nast to be a successful business in an emerging economy that is now predicted to be painfully slow in recovering.

This is a considerable and complicated task, forcing us to rethink the way we do business in many instances and incorporate efficiencies in every step of our process. Beginning this week, I am dedicating myself and a team of my colleagues to this project. We will work with consultants, including McKinsey & Company, to develop new perspectives on optimizing our approach to business, growing revenues, and enhancing our brand assets. All areas of Condé Nast will be included in the study.

There is no doubt in my mind that the strength of our brands and people will provide us with the opportunity to participate in America's economic recovery. Ensuring our financial health is paramount to our ability to be part of that process.

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